Notes on clauses
Clause 1—Short title
1
This clause specifies that the short title of the Bill, once enacted,
will be Appropriation Act (No. 4) 2010‑2011.
2
Clause 2 provides for the Bill to commence as an Act on the day of
Royal Assent.
3
Clause 3 defines the key terms used in the Bill, such as “administered
item”, “Agency”, “current year”, “other departmental item” and “State,
ACT, NT and local government item”.
4
Clause 4 declares that the Portfolio Statements (PBS and PAES) are
extrinsic material under paragraph 15AB(2)(g) of the Acts
Interpretation Act 1901 (AI Act) that may be used to ascertain the meaning
of certain provisions in accordance with subsection 15AB(1) of the AI Act.
The purpose of the Portfolio Statements are to provide information on the
proposed allocation of resources to Government outcomes by agencies within each
portfolio. The Portfolio Statements provide information to enable Parliament to
understand the purpose of appropriations proposed in the Bill. The term
“Portfolio Statements” is defined at clause 3, to mean the PBS and PAES.
Clause 5—Notional payments, receipts etc.
5
Clause 5 ensures that payments between agencies result in a debit from the
appropriation for the paying agency. For example, the payments of the amounts
in Schedule 2 from one FMA Act agency to another do not require, in a
constitutional sense, an appropriation, because both agencies operate within
the CRF. However, for reasons of financial discipline and transparency, the
practice has arisen for these payments between agencies to be treated as though
they required an appropriation, and to debit an appropriation when such notional
payments are made.
6
Clause 5 provides that notional transactions between agencies are to be treated
as if they were real transactions. Notional transactions, therefore, require
the use of a drawing right and the debiting of an appropriation made by
Parliament. When an FMA Act agency makes a payment, whether to another FMA Act
agency or another part of the same agency (such as a different “business unit”
within the agency), it is to be treated as a “real” payment. This means that
the appropriation made by Parliament is extinguished by the amount of the
notional payment, even though no payment is actually made from the CRF. Similarly,
a notional receipt in such a situation is to be treated by the receiving
agency (where relevant) as if it were a real receipt. This does not mean every
internal transfer of public money involves a notional payment and receipt. As
explained in Regulation 19 of the Financial Management and Accountability
Regulations 1997 (FMA Regulations), some transfers of public money
from one official account to another do not involve a notional payment or
debiting an appropriation.
Part 2—Appropriation items
Clause 6—Summary of appropriations
7
Clause 6 sets out the total of the appropriations in Schedule 2 of the
Bill. Importantly, the amounts in Schedule 2 may be adjusted under the
provisions in Part 3 of the Bill. In particular:
·
States, ACT, NT and local government items and administered items
may be reduced in accordance with clause 12;
·
Administered assets and liabilities items and other departmental items
may be reduced in accordance with clause 13;
·
CAC Act body payment items may be reduced in accordance with
clause 14; and
·
items may be increased by a determination under clause 15
(Advance to the Finance Minister).
8
The amounts in Schedule 2 of the Bill may be adjusted further in
accordance with sections 30, 30A, 31 and 32 of the FMA Act. Specifically:
·
Section 30 allows an agency to re-credit, to an appropriation
that had been relied upon for an initial payment by the agency, an amount
equivalent to the repayment. The re-crediting, or reinstatement, authorised by
section 30, can result in the total amount paid from the CRF in gross
terms exceeding the amount specified in an item. Section 30 also applies to
notional transactions between and within agencies.
·
Appropriations may be adjusted by amounts recovered by an agency
from the Australian Taxation Office for Goods and Services Tax (GST), in accordance
with section 30A of the FMA Act. The amounts specified in Schedule 2
exclude recoverable GST. The appropriations shown represent the net amount that
Parliament is asked to allocate to particular purposes. Section 30A has
the effect of increasing an appropriation by the amount of the GST qualifying
amount arising from payments in respect of the appropriation. As a result,
there is sufficient appropriation for payments under an appropriation item,
provided that the amount of those payments, less the amount of recoverable GST,
can be met from the initial amount shown against the item in Schedule 2. Section 30A
also applies to notional transactions between and within agencies.
·
Departmental items may be increased to take into account certain
other amounts received by an agency, if those receipts are prescribed by the FMA
Regulation 15, in accordance with section 31 of the FMA Act. For
example FMA Regulation 15 prescribes amounts that offset costs in relation
to the activities of an agency and amounts that relate to an employee’s leave
(including amounts received by an agency under the new paid parental leave
scheme that was established on 1 January 2011). FMA Regulation 15
also establishes a mechanism for agencies to hold money in a trust or similar
arrangement as departmental.
·
Items may be adjusted to take into account the transfer of
functions between agencies, in accordance with section 32 of the FMA Act. It
is possible that adjustments under section 32 may result in new items
and/or outcomes being created in an Appropriation Act. It might also result in
amounts being transferred between Appropriation Acts.
Clause 7— State, ACT, NT and local government items
9
Clause 7 provides administered appropriations for financial assistance
to the States, ACT, NT and local governments. State, ACT, NT and local
government items are appropriated separately for outcomes, making it clear what
the funding is intended to achieve. The amount specified in Schedule 2 for an
outcome may be applied by an agency for the purpose of making payments to any
of the States, ACT, NT or local government authorities for the purpose of
achieving that outcome.
10
Clauses 7 and 18 delegate Parliament’s power under section 96 of the
Constitution to impose terms and conditions on payments of financial assistance
to the States to the responsible Ministers listed in Schedule 1 of the
Bill. Schedule 1 also lists the Ministers who may determine the amounts and
timing of those payments. There is a process in clause 12 for dealing with
State, ACT, NT and local government items that are not fully expensed or spent
during the year.
Clause 8—Administered items
11
Subclause 8(1) provides for the appropriation of new administered outcome
amounts to be applied by an agency for the purpose of contributing to the
outcome for an agency. An administered item is defined in clause 3 to be an
amount set out in Schedule 2 opposite an outcome for an agency under the
heading “New Administered Outcomes”. As with administered items in Appropriation
Bill (No. 3) 2010-2011, New Administered Outcomes are appropriated
separately for outcomes (i.e. unlike departmental items, the split across
outcomes is not notional), making it clear what the funding is intended to
achieve. Schedule 2 specifies how much can be expended on each outcome. New Administered Outcomes are proposed when:
·
an agency seeks administered operating appropriations for the
first time (including existing agencies that have received departmental operating
appropriations in the past);
·
annual administered operating appropriations are proposed for the
first time, for programs previously funded by special appropriations; and
·
an agency’s outcomes are changed to reflect new program
objectives, strategies and/or activities.
12
The purposes for which each administered item can be spent are set out
in subclause 8(2). Subclause 8(2) provides that where the Portfolio
Statements indicate a particular activity is in respect of a particular
outcome, then expenditure on that activity is taken to be expenditure for the
purpose of contributing to achieving that outcome. The outcomes are not,
however, necessarily tied to the existence of a particular agency (e.g. abolishing
a department will not affect the valid operation of an appropriation for an
administered item for an outcome of that department, because the purpose of the
appropriation does not depend on the existence of the department).
13
New administered outcomes are those administered by an agency on behalf
of the Government (e.g. certain grants, benefits and transfer payments). These
payments are usually made pursuant to eligibility rules and conditions
established by the Government or the Parliament. Specifically:
·
administered items are tied to outcomes, departmental items are
not;
·
administered items must be spent in accordance with rules and
conditions established by the Government or the Parliament; and
·
there is a process in clause 12 for dealing with administered
items that are not fully expensed or spent during the financial year.
14
The Finance Minister manages payments from administered items by agencies
through the issuing of drawing rights in accordance with sections 26 and
27 of the FMA Act. Drawing rights control who may spend money from
appropriations, and allow for conditions and limits to be set by the
Finance Minister (or the Finance Minister’s delegate) in relation to those
activities.
Clause 9—Administered assets and liabilities items
15
Clause 9 provides amounts in Schedule 2 to acquire
administered assets, enhance existing administered assets and/or discharge administered
liabilities relating to activities administered by agencies on behalf of the Government. Administered assets and liabilities
appropriations are provided for functions managed by an agency on behalf of the
Government. Administered assets and liabilities items can be applied for any outcomes of the agency in Schedule
2 of the Bill, Schedule 1 to the Appropriation Act (No. 1) 2010-2011 (Act No. 1),
Schedule 2 to the Appropriation Act (No. 2) 2010-2011 (Act No. 2) or Schedule 1 to Appropriation Bill (No. 3) 2010-2011.
16
Amounts appropriated for administered assets and liabilities items can
be subject to a reduction process in accordance with clause 13 of the
Bill. Under clause 13, the Minister responsible for an agency may make a
written request to ask the Finance Minister to make a written determination
to reduce an item of an agency. If the Finance Minister is responsible for the
agency, the Chief Executive of the agency may make the request.
17
The Finance Minister manages payments from administered assets and liabilities
items by agencies through the issuing of drawing rights, in accordance with sections 26 and 27
of the FMA Act. Drawing rights control who may spend money from appropriations,
and they allow for conditions and limits to be set by the Finance Minister (or the Finance Minister’s delegate)
in relation to those activities.
Clause 10—Other departmental items
18
Clause 10 appropriates departmental non-operating appropriations in the
form of equity injections and loans, over which the agency also exercises control.
This clause provides that the amount specified in other departmental items for
an agency may be applied for the departmental expenditure of the agency. In
short:
- “equity injections”
can be provided to agencies to, for example, enable investment in assets
to facilitate departmental activities; and
- “loans” can be
provided to agencies when an investment in future departmental activities
is expected to result in a direct return such as an efficiency saving
(these are generally not formal loans established in contracts).
19
Other departmental items are not expressed in terms of a particular
financial year and do not automatically lapse. Other departmental items are
available until they are spent. For example, equity injection appropriations
provide funding to meet the cost expected to be incurred in the Budget year to
acquire a new asset; however, for a number of reasons, some part of the appropriation
might not be required until a later financial year. Amounts appropriated for another
departmental item can be subject to a reduction process in accordance with
clause 13 of the Bill.
20
The Finance Minister manages the payment from other departmental
items by agencies through the issuing of drawing rights in accordance with sections 26 and 27 of the FMA Act. Drawing
rights control who may spend from appropriations, and allow for conditions and
limits to be set by the Finance Minister (or the Finance Minister’s delegate)
in relation to those activities.
Clause 11—CAC Act body payment items
21
Clause 11 provides for direct appropriations of money for CAC Act bodies
to be paid from the CRF by the relevant department. Clause 11 provides
that payments for CAC Act bodies must be used for the purposes of those bodies.
22
A CAC Act body is defined in clause 3 to be a Commonwealth
authority or a Commonwealth company within the meaning of the CAC Act. Many CAC Act
bodies receive funding directly from appropriations. However, these bodies are
legally separate from the Commonwealth, and as a result, do not debit
appropriations or make payments from the CRF.
23
CAC Act body payments are initiated by requests to the relevant
portfolio agencies from the CAC Act bodies. The Finance Minister manages appropriations
for CAC Act bodies through the issuing of drawing rights in accordance with sections 26
and 27 of the FMA Act. Drawing rights control who may spend money from
appropriations and allow for conditions and limits to be set by the Finance
Minister (or the Finance Minister’s delegate) in relation to those payments.
CAC Act bodies hold the amounts paid to them on their own account.
24
Subclause 11(2) provides that if a CAC Act body is subject to
another Act that requires amounts appropriated by Parliament for the purposes
of that body to be paid to the body, then the full amount of the CAC Act body
payment must be paid to the body. The purpose of subclause 11(2) is to
clarify that subclause 11(1) is not intended to qualify any obligations in
other legislation regulating a CAC Act body, where that other legislation
requires the Commonwealth to pay the full amount appropriated for the purposes
of the body.
25
The full amount of the CAC Act body payments specified in Schedule 2
may be reduced in accordance with clause 14. Subclause 14(6) provides that subclause 11(2)
does not prevent the CAC Act body payments in Schedule 2 being reduced.
26
In addition to the annual appropriations, some CAC Act bodies may also
receive public money from related entities such as a portfolio department and from
special appropriations managed by those departments. Many CAC Act bodies also
receive funds from external sources.
Part 3—Adjusting appropriation items
27
Part 3 of the Bill provides for reductions or increases to the amounts specified
in Schedule 2. The reduction provisions are contained in clauses 12
through 14 inclusive. The Advance to the Finance Minister provision that can
increase the amounts specified in Schedule 2 is contained in clause 15.
28
Clauses 12, 13 and 14 were amended in the 2009-2010 Appropriation Bills,
by introducing additional mechanisms for initiating the reduction of unspent
items. This has the purpose of increasing the efficiency of the reduction
process particularly when surplus appropriations result from government
decisions.
Clause 12—Reducing State, ACT, NT and local government items and
administered items
29
Clause 12 provides for amounts of State,
ACT, NT and local government items and administered
items which are not required at the end of the current year to be
extinguished. If the Government then decides that the amounts should be spent
in a later financial year, it must request Parliament to appropriate these
amounts in future Appropriation Bills.
30
Clause 12 limits the amount that may be applied for those items to the
amount reported in an agency’s annual report. Subclause 12(1) provides that if
the amount published in the annual report is less than the amount of the item,
then the relevant item is taken to be reduced to the amount specified in the
annual report. The amount of the item specified in Schedule 2 of the Bill may
be increased or reduced by the other clauses of Part 3 of the Bill or in
accordance with sections 30, 30A and 32 of the FMA Act. The amount in the
annual report must therefore be compared with the amount for the item in Schedule 2,
together with any adjustments that have been made to that amount.
31
Subparagraph 12(2)(a)(i) retains a power for the Finance Minister to make
a written determination specifying that subclause 12(1) does not apply in
relation to the item. Subparagraph 12(2)(a)(ii) enables the Finance
Minister to determine that an amount published in the financial statements of an
agency is taken to be an amount specified in his or her determination. The
power in paragraph 12(2)(b) is to ensure that the amount published for the
item can be corrected if, for example, the amount is erroneous. Additionally,
the power in paragraph 12(2)(b) is to provide the Finance Minister with
the capacity to make a written determination in those cases where an agency has
failed to specify a required amount in its annual report. In those cases, the
amount specified in the determination as the required amount will be taken to
be the required amount for the purposes of subclause 12(1).
32
Subclause 12(3) provides that a determination made under subclause 12(2)
is a legislative instrument. Despite subsection 44(2) of the Legislative
Instruments Act 2003 (LI Act), which provides that instruments
made under annual Appropriation Acts are not subject to disallowance,
subclause 12(3) provides that a determination reducing a State, ACT, NT
and local government items or an administered item is subject to disallowance
in accordance with section 42 of the LI Act. Parliament retains the power
to disallow a determination to reduce one or more of these items because the
determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 12(3) also confirms subsection 54(2) of the LI
Act, which provides that instruments made under Appropriation Acts are
not subject to sunsetting.
Clause 13—Reducing administered assets and liabilities items and other departmental
items
33
Clause 13 provides a process for reducing administered assets and
liabilities items and other departmental items. Generally, these items remain
available until the appropriation is spent or reduced in accordance with
clause 13. This clause enables surplus departmental item appropriation
amounts to be reduced to promote the efficient, effective, economical
and ethical management of any surplus appropriations. Agencies should only spend
all of an administered assets and liabilities item or another departmental item
if there are government decisions to support that expenditure. Examples of
where clause 13 may be appropriate to reduce an administered assets and
liabilities item or another departmental item include:
·
an excessive amount of appropriation was made in error;
·
an amount is reclassified and appropriated again under another
kind of appropriation (e.g. where an amount appropriated as departmental
is to be reclassified as administered and a new administered appropriation is
provided). The existing departmental appropriation remains legally available
even though there is no Government authority to spend the funds;
·
efficiency savings result in a program costing less than
expected; or
·
a program is abolished under government policy before the
appropriation is expended.
34
Paragraph 13(1)(a) enables the Prime Minister, or a Minister acting on
behalf of the Prime Minister, to request the Finance Minister to reduce an
administered assets and liabilities item or another departmental item for an
agency. Paragraph 13(1)(b) enables the Minister responsible for a
particular agency to request the Finance Minister to reduce an administered
assets and liabilities item or another departmental item for an agency for
which they are responsible. Paragraph 13(1)(c) enables the Chief Executive
of an agency for which the Finance Minister is responsible, to request the
Finance Minister to reduce an administered assets and liabilities item or an
other departmental item for that agency. Subclause 13(6) assists readers
by noting that a request under subclause 13(1) is not a legislative
instrument within the meaning of section 5 of the LI Act, on the
basis that it is requesting a determination to be made and it is the
determination that has substantive effect.
35
Subclause 13(2) enables the Finance Minister to make a written determination
to reduce an administered assets and liabilities item or another departmental
item. The Finance Minister is not obliged to act on a request to reduce excess appropriations.
However, if the Finance Minister does:
·
the determination must be for the amount specified in the
request: subclause 13(2);
·
the determination may not reduce the item below nil:
subclause 13(3); and
·
the item in Schedule 2 will be taken to be reduced in accordance
with the determination of the Finance Minister: subclause 13(4).
36
Subclause 13(5) provides that a determination made under
subclause 13(2) once made, must not be rescinded, revoked, amended or
varied. Subclause 13(5) applies despite 33(3) of the AI Act. This
subclause intends to exclude the operation of 33(3) of the AI Act from
determinations made under subclause 13(2). The purpose of subclause 13(5)
is to ensure that the appropriation, if reduced under the clause, cannot be
restored by means of a later determination.
37
Subclause 13(7) provides that a determination made under
subclause 13(2) is a legislative instrument. Despite subsection 44(2) of
the LI Act, which provides that instruments made under annual
Appropriation Acts are not subject to disallowance, subclause 13(7)
provides that a determination reducing an administered assets and liabilities
item or other departmental item, is subject to disallowance in accordance with
section 42 of the LI Act. Parliament retains the power to disallow a
determination to reduce a departmental item because any such determination will
reduce the amount of an appropriation authorised by Parliament. Subclause 13(7)
also confirms subsection 54(2) of the LI Act, which provides
that instruments made under annual Appropriation Acts are not subject to
sunsetting.
Clause 14—Reducing CAC Act body payment items
38
Clause 14 provides a similar process for reducing CAC Act body payment
items to the process for reducing administered assets and liabilities items and
other departmental items. Paragraph 14(1)(a) enables the Prime Minister, or
a Minister acting on behalf of the Prime Minister, to request that the Finance
Minister reduce a CAC Act body payment item for an agency. Paragraph 14(1)(b)
enables the Minister responsible for a particular agency to request the Finance
Minister to reduce a CAC Act body payment item for a body for which they are
responsible. Paragraph 14(1)(c) enables the Secretary of the Department of
Finance and Deregulation to request the Finance Minister to reduce a CAC Act
body payment item for a body in the Finance and Deregulation portfolio.
39
Subclause 14(7) assists readers by noting that a request under subclause 14(1)
is not a legislative instrument within the meaning of section 5 of the
LI Act, on the basis that it is requesting a determination to be made and
it is the determination that has substantive effect.
40
Subclause 14(2) enables the Finance Minister to make a written
determination to reduce a CAC Act body payment item. The Finance Minister is
not obliged to act on a request to reduce an excess CAC Act body payment item. However,
if the Finance Minister does:
·
the determination must be for the amount specified in the request:
subclause 14(2);
·
the determination may not reduce the CAC Act body payment item
below nil: subclause 14(3); and
·
the CAC Act body payment item in Schedule 2 will be taken to
be reduced in accordance with the determination of the Finance Minister:
subclause 14(4).
41
Subclause 14(5) provides that a determination made under subclause 14(2)
once made, must not be rescinded, revoked, amended or varied. Subclause 14(5)
applies despite subsection 33(3) of the AI Act. This subclause intends to
exclude the operation of subsection 33(3) of the AI Act from
determinations made under subclause 4(2). The purpose of subclause 14(5)
is to ensure that the appropriation, if reduced under the clause, cannot be
restored by means of a later determination.
42
Subclause 14(6) provides that the full amount that is required to be
paid to a CAC Act body by subclause 11(2) of the Bill may be reduced in
accordance with this clause 14.
43
Subclause 14(8) provides that a determination made under
subclause 14(2) is a legislative instrument. Despite subsection 44(2)
of the LI Act, which provides that instruments made under annual Appropriation
Acts are not subject to disallowance, subclause 14(8) provides that a
determination reducing a CAC Act
body payment item is subject to disallowance in accordance with
section 42 of the LI Act. Parliament retains the power to disallow a
determination to reduce a CAC Act body payment item because any such
determination will reduce the amount of an appropriation authorised by
Parliament. Subclause 14(8) also confirms subsection 54(2) of the LI Act,
which provides that instruments made under annual Appropriation Acts are not
subject to sunsetting.
Clause 15—Advance to the Finance Minister
44
Section 15 of Act No. 2 enables the Finance Minister to provide
additional appropriations for items when satisfied there is an urgent need for that
expenditure, and the existing appropriation is inadequate. This additional
appropriation is referred to as the Advance to the Finance Minister (AFM). Subsection
15(3) of Act No. 2 provides that the total amount that can be determined under
the AFM provision is $380 million.
45
Clause 15 of the Bill provides that irrespective of the amounts issued
from the AFM before the commencement of the Bill, the amount available under
section 15 of Act No. 2 will be restored to the original amount of $380 million.
The provision has been added to the Bill to ensure that there will be
sufficient scope to provide amounts from the AFM for the remainder of the
financial year.
46
Subclause 15(1) specifies that if the
Finance Minister has determined under subsection 15(2) of Act No. 2 to increase
an amount in Schedule 2 of Act No. 2 from the AFM, then the amount is to be
disregarded for the purposes of subsection 15(3) of Act No. 2 when the Bill
commences. From the date the Bill commences the total amount that can be
determined under the AFM will be $380 million. Subclause 15(2) will prevent appropriations for the same
expenditure from both the AFM and the Bill. Subclause 15(2) ensures that if
Schedule 2 of the Bill provides an amount for a particular expenditure and,
prior to the commencement of the Bill, the Finance Minister determines an
amount from the AFM under section 15 of Act No. 2 for the same expenditure (the
advanced amount), then the appropriation in the Bill will be reduced by the
amount of the advanced amount. For example if the Bill provides $20 million for
a program and an advanced amount of $5 million is determined by the Finance
Minister under Act No. 2 for a particular payment under that program, then the
amount appropriated by the Bill, once enacted, will be reduced by $5 million
(i.e. appropriating only $15 million for the program).
47
The Finance Minister may continue to make determinations under
subsection 15(2) of Act No. 2 to add an amount from the AFM to an item of an
agency if the criteria in subsection 15(1) of Act No. 2 are satisfied.
Part 4—General drawing rights limits
Clause 16 – General drawing rights limits
48
Clause 16 specifies three new general drawing rights limits for the Nation-building
Funds Act 2008 and a new general drawing rights limit for the Federal
Financial Relations Act 2009 by altering the operation of section 16 in Appropriation
Act (No. 2) 2009-2010. The general drawing rights limits provide
Parliament with a mechanism by which it may review the maximum amounts that can
be paid under each of these Acts in a financial year. Note that this clause is
not an appropriation for either of the Nation-building Funds Act 2008 or
and Federal Financial Relations Act 2009.
49
The general drawing rights limits declared in the Bill for the Building
Australia Fund (BAF), Education Investment Fund (EIF),and Health and
Hospitals Fund (HHF) replace the BAF, EIF and HHF general drawing rights limits
declared in Act No. 2.
50
The changes to the 2010-11 BAF, EIF and HHF general drawing right limits
reflect minor adjustments in the timing of payments from the Funds.
Nation-building Funds Act
2008
51
For the purposes of section 109 of the Nation-building Funds Act 2008,
subclause 16(1) provides that the general drawing rights limit for the Building
Australia Fund (BAF) for the current year is $1,321,100,000
52
The BAF is established under section 12 of the Nation-building
Funds Act 2008. It consists of the investments of the BAF and the BAF
Special Account, which is a Special Account recognised under section 21 of the
FMA Act and established under section 13 of the Nation-building
Funds Act 2008. The general drawing rights limit applies to the main
purposes of the BAF, namely making payments in relation to the creation or
development of transport infrastructure, communications infrastructure, energy
infrastructure and water infrastructure. The general drawing rights limit does
not apply to payments for eligible Nation Broadband Network matters.
53
For the purposes of section 199 of the Nation-building Funds Act 2008,
subclause 16(2) provides that the general drawing rights limit for the Education
Investment Fund (EIF) for the current year is $1,236,958,000.
54
The EIF is established under section 131 of the Nation-building Funds
Act 2008. It consists of the investments of the EIF and the EIF Special
Account, which is a Special Account recognised under section 21 of the FMA Act
and established under section 132 of the Nation-building Funds
Act 2008. The general drawing rights limit applies to the main
purposes of the EIF, namely making payments in relation to the creation or
development of higher education infrastructure, research infrastructure,
vocational education and training infrastructure, and eligible education
infrastructure, as well as any transitional Higher Education Endowment Fund
payments.
55
For the purposes of section 267 of the Nation-building Funds Act 2008,
subclause 16(3) provides that the general drawing rights limit for the Health
and Hospitals Fund (HHF) for the current year is $1,104,153,330.
56
The HHF is established under section 214 of the Nation-building
Funds Act 2008. It consists of the investments of the HHF and the HHF
Special Account, which is a Special Account recognised under section 21 of the FMA Act
and established under section 215 of the Nation-building Funds Act 2008.
The general drawing rights limit applies to the main purposes of the HHF,
namely making payments in relation to the creation or development of health
infrastructure.
57
It is important to note that this Bill will not appropriate amounts to
be paid from the BAF, the EIF or the HHF. The intention for specifying general
drawing rights limits in subclauses 16(1) to 16(3) inclusive is to set maximum
limits on the amounts that may be covered by drawing rights issued by the
Finance Minister under the FMA Act for the current year, for the purposes to
which the limits apply.
58
Under section 27 of the FMA Act, the Finance Minister is able to issue
drawing rights, without which no public money may be spent, thereby providing a
control mechanism over spending. That power has been delegated to various
officials. Clause 16 places a limit over the amount of drawing rights that may
be issued.
59
Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective mechanism to
manage expenditure of public money as the official or Minister making a payment
of public money cannot do so without the authority of a valid drawing right
under the FMA Act. The purpose of so doing is to provide Parliament with a
transparent mechanism by which it may review the rate at which amounts
committed to the BAF, EIF and HHF are expended.
60
The general drawing rights limits for the current year for the BAF,
EIF and HHF are specific to the current year applicable to this Act and will
not limit the general drawing rights limits that may be specified in regard to
any other year.
Federal Financial
Relations Act 2009
61
For the purposes of paragraph 9(3)(b) of the Federal Financial
Relations Act 2009, subclause 16(4) provides that the general drawing
rights limit for general purpose financial assistance for the current year is
$1,500,000,000.
62
This general drawing rights limit applies for the current year to the
amount that the Treasurer can credit to the COAG Reform Fund and the total
amount covered by drawing rights authorising debits from that Fund for the
purposes of making a grant of general purpose financial assistance to a State,
the Australian Capital Territory or the Northern Territory.
63
The COAG Reform Fund was established by section 5 of the COAG Reform
Fund Act 2008, which is a Special Account under section 21 of the FMA Act. The
purposes of the COAG Reform Fund Special Account are provided at section 6 of
the COAG Reform Fund Act 2008.
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If a general drawing rights limit is not indicated in an Appropriation
Act for the purposes of paragraph 9(3)(b) of the Federal Financial Relations
Act 2009 for a financial year, amounts cannot be credited to the COAG
Reform Fund under paragraph 9(2)(a) of the Federal Financial Relations Act
2009, and drawing rights must not be issued authorising debits from
the COAG Reform Fund for the purposes to which the limit applies.
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It is important to note that this Bill will not appropriate amounts to
be paid under sections 9 and 16 of the Federal Financial Relations Act 2009.
The intention for specifying general drawing rights limits in subclause 16(4)
is to set maximum limits on the amounts that may be covered by drawing rights
issued by the Finance Minister under the FMA Act for the current year, for the
purposes to which those limits apply.
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Under section 27 of the FMA Act, the Finance Minister is able to issue
drawing rights, without which no public money may be spent, thereby providing a
control mechanism over spending. That power has been delegated to various
officials. Clause 16 places a limit over the amount of drawing rights that may
be issued.
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Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective mechanism to
manage expenditure of public money as the official or Minister making a payment
of public money cannot do so without the authority of a valid drawing right
under the FMA Act. The purpose of so doing is to provide Parliament with a
transparent mechanism by which it may review the rate at which amounts are
committed for expenditure.
Part 5—Miscellaneous
Clause 17—Crediting amounts to Special Accounts
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Clause 17 provides that if the purpose of an item in Schedule 2 is
also the purpose of a Special Account (regardless of whether the item expressly
refers to the Special Account), then amounts may be debited against the
appropriation for that item and credited to the Special Account. Special Accounts
may be established under the FMA Act by a determination of the Finance Minister
(section 20) or by another Act (section 21). The determination or Act
that establishes the Special Account will specify the purposes of the Special Account.
Clause 18—Conditions etc. applying to State, ACT, NT and local government
items
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Clause 18 deals with Parliament’s
power under section 96 of the Australian Constitution to provide
financial assistance to the States. Clause 18 delegates the power to the
responsible Ministers listed in Schedule 1 of the Bill, by providing the
Ministers named in Schedule 1 with the power to determine:
·
conditions under which payments to the States, the ACT and NT and
local councils may be made: paragraph 18(2)(a);
and
·
the amounts and timing of those payments: paragraph 18(2)(b).
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Subclause 18(4) provides that
determinations made under subclause 18(2)
are not legislative instruments, because these determinations are not altering
the appropriations approved by Parliament. Determinations under subclause 18(2) will simply determine how appropriations for
State, ACT, NT and local government items will be paid. The determinations are
issued when required. However, payments can be made without either
determination.
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Although financial assistance is provided to the ACT, NT and local
government authorities without reference to section 96 of the Constitution,
those payments are administered in the same way. Therefore the Ministers
identified in Schedule 1 may set the amounts and timing and impose terms
and conditions on those payments. Subclause 18(5) also notes that clause 18
will not limit the powers of the Commonwealth under section 96 of the
Constitution to provide financial assistance to a State which is not
appropriated by a State, ACT, NT and local government item.
Clause 19—Appropriation of the Consolidated Revenue Fund
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Clause 19 provides that the CRF is appropriated as necessary for the
purposes of the Bill. Significantly, this clause notes that the amounts
appropriated by the Bill may be affected by the FMA Act, in particular sections 30,
30A and 32 of the FMA Act (see clause 6).
Schedule 1—Payments to or for the States, ACT, NT and local government
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In accordance with clause 18, Schedule
1 lists the Ministers responsible for determinations on payments to or for the
States, ACT, NT and local government.
Schedule 2—Services for which money is appropriated
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Schedule 2 specifies the services for which amounts will be appropriated
by the Bill. Schedule 2 contains a summary table which lists the total amounts
for each portfolio. A separate summary table is included with further detail for
each portfolio, with other tables detailing the appropriations for each agency.
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Schedule 2 includes, for information purposes, a figure for the
previous financial year labelled the Actual Available Appropriation. The
figure is printed in italics under each appropriation amount to provide a
comparison with the proposed appropriations. The Actual Available Appropriation
does not affect the amounts available at law.
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More details about the appropriations in Schedule 2 are contained in the Portfolio
Statements and the second reading speech.